RTGS Determinant & Sub-transaction Behavior during COVID-19 in Indonesia

This paper investigates external factors affecting Indonesia’s Real Time Gross Settlement (RTGS) transactions by applying machine learning regularization to identify key variables from a large dataset. A Vector AutoRegression (VAR) model analyzes dynamic links among RTGS sub-transactions, while Impulse Response Function (IRF) analysis examines system behavior during COVID-19 shocks. Using monthly data on 75 economic indicators, we show that 21 variables most accurately capture the movement of Bank Indonesia Real Time Gross Settlement System (BIRTGS) transactions. The study shows that monetary operation sub-transactions most strongly affect other BI-RTGS sub-transactions. Impulse Response Function analysis also finds that shocks in customer transfers and capital market transactions during COVID-19 can negatively impact fiscal soundness and financial stability

Nonlinear Monetary Policy Reaction Function and Macroeconomic Fundamentals in India

The hybrid Taylor rule of the Reserve Bank of India (RBI) is the subject of the current study, which investigates nonlinearities in an open economy that includes a fiscal variable. The analysis employs a nonlinear cointegration approach and identifies policy preference asymmetries. The RBI prioritizes price stability due to the preference for inflation avoidance over recession. Fiscal variable plays a significant role in estimating the Taylor rule, which suggests that it is necessary to align fiscal and monetary policy in order to maintain the inflation within the designated range. Lastly, the nonlinear Taylor rule findings not only aid in comprehending the central bank’s policy setting behavior but also prevent the drawing of inaccurate and misleading inferences

EDITORIAL Policy Innovation in a Turbulent World: Embracing Digitalization and Artificial Intelligence Amid Global Uncertainty The 18th BMEB International Conference Special Issue

Policy Innovation in a Turbulent World: Embracing Digitalization and Artificial Intelligence Amid Global Uncertainty The 18 th BMEB International Conference Special Issu

Does Climate Change Impacts Output? An Empirical Evidence from Asia Pacific Countries.

The study examines the nexus between output, Gross Domestic Product (GDP), renewable energy, trade openness, carbon emission, and foreign direct investment in Asia Pacific countries Using the autoregressive distributed lag model and yearly data from 1990 to 2021, we find (a) a long-run relationship among the variables under consideration, (b) that GDP positively impacts output in most countries, (c) that CO2 and renewable energy display varied effects, and (d) in the short run, GDP and trade openness generally exert a positive influence, but GDP demonstrates a mix of positive and negative impacts. Policymakers need to provide stable policies for environmental variables for sustainable growth

Health Crisis and Currency Risk: Fresh Evidence from New Data Sets

With the aid of a method of predictability analysis that involves a feasible quasigeneralized least squares estimator, we examine the predictive power associated with the newly computed COVID-19 indices, which are disaggregated into six indices for currency market risks (realized volatility of exchange rate). Our sample size covers the period between December 31, 2019, and December 28, 2021. We note mixed outcomes for the major currency markets considered. On average, while the health crisis seems to have heightened the risks associated with Pounds Sterling, Australian Dollar and Canadian Dollar against USD, it exerts a moderating effect on the Euro, Yen and Swiss Franc against USD. However, the indices consistently demonstrate predictive prowess across multiple out-of-sample forecasts, which we adduce to the richness of the new measures

Performance of Digital Economic Indicators During the Covid-19 Pandemic: Payment System Case of Indonesia

We explore the performance of digital payment system instruments during both the pre-COVID-19 period and during the pandemic. We focus on four main digital economic indicators in Indonesia; namely, electronic money, Automated Teller Machine (ATM), digital banking, and Real Time Gross Settlement (RTGS) transactions. Using monthly data covering the period 2013:01 to 2023:04 obtained from Bank Indonesia, we employ the Difference-in-Differences method to assess the impact of the pandemic on digital economic indicators. The results show that during the pandemic, generally, the transaction value of electronic money, digital banking and RTGS are continuously upward trending, while the number of electronic money and ATM cards per month were more during the pandemic than pre-pandemic

Loan Restructuring and Deposit Growth: Evidence from the Market Discipline during the COVID-19 Outbreak

Amid the COVID-19 pandemic, banks boosted loan restructuring efforts to offer borrowers assistance and preserve credit quality. This study employs dynamic and static panel data from Indonesian commercial banks to include restructured loans as a metric for assessing market discipline prior to and during the pandemic. Depositors shown discipline about banks’ credit risk during the COVID-19 period and exhibited heightened sensitivity to restructured loans. Subsequent analysis indicates that the association between deposit growth and restructured loans was more pronounced in government, small, and publicly listed banks during the outbrea

How do Life and Non-Life Insurance Affect Financial Inclusion? New Empirical Evidence from a Cross-Country Analysis

This paper examines the influence of life and non-life insurance on financial inclusion in 79 countries during 2019. Financial inclusion indices were calculated using the Euclidean distance approach. The study reveals that the financial inclusion level is considerably impacted by the integration of insurance indicators. In over 64% of the countries, the financial inclusiveness is reduced as a result of the incorporation of life insurance. In contrast, the financial inclusiveness of nearly 47% of the countries was enhanced by the inclusion of non-life insurance. The paper emphasizes the necessity for policymakers to take insurance into account as a critical element of financial inclusion strategies and measures, providing valuable insights for improving global financial inclusiveness

Exchange Rate and Indonesia Economic Growth

We examine the effect of the exchange rate on the economy and the impact of the Dominant Currency Paradigm (DCP) on Indonesia’s export volume. This study employs multiple methodologies, namely the Auto Regressive Distributed Lag (ARDL) model, the non-linear version of ARDL, and panel regressions. The findings indicated that the depreciation of the exchange rate influenced economic expansion. The beneficial effect was mitigated by the influence of finance as seen in the company’s financial sheet. The findings also indicate the influence of DCP on the volume of international trade in Indonesia

Triple Shock on External Sustainability in Indonesia

This study evaluates Indonesia’s external sustainability by analyzing exports, imports, and net unilateral transfer payments. The study utilizes Indonesia’s data from the third quarter of 2005 to the fourth quarter of 2019, applying both a long-run dynamic model and a short-run forward-looking model incorporating triple shocks. This research excludes the period from 2020 onwards due to the economic upheaval in Indonesia resulting from the COVID-19 outbreak. This study concludes that Indonesia’s current account is unsustainable, as neither export nor import variables exhibit a long-term link, hence failing to meet intertemporal budget constraints. Furthermore, imports substantially influence long-term exports, which increase at a slower rate than imports. Economic variations and global oil price volatility also affect exports